I 

116TH CONGRESS 

1ST SESSION H. R. 2919 

To require the Securities and Exchange Commission to carry out a study 

to evaluate the issues affecting the provision of and reliance upon investment research into small issuers. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 22, 2019 

Mr. HUIZENGA (for himself and Mr. MCADAMS) introduced the following bill; 

which was referred to the Committee on Financial Services 

A BILL 

To require the Securities and Exchange Commission to carry 

out a study to evaluate the issues affecting the provision 

of and reliance upon investment research into small 

issuers. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Improving Investment 

5 Research for Small and Emerging Issuers Act’’. 

6 SEC. 2. RESEARCH STUDY. 

7 (a) STUDY REQUIRED.—The Securities and Ex8 change Commission shall conduct a study to evaluate the 


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1 issues affecting the provision of and reliance upon invest2 ment research into small issuers, including emerging 

3 growth companies and companies considering initial public 

4 offerings. 

5 (b) CONTENTS OF STUDY.—The study required 

6 under subsection (a) shall consider— 

7 (1) factors related to the demand for such re8 search by institutional and retail investors; 

9 (2) the availability of such research, includ10 ing— 

11 (A) the number and types of firms who 

12 provide such research; 

13 (B) the volume of such research over time; 

14 and 

15 (C) competition in the research market; 

16 (3) conflicts of interest relating to the produc17 tion and distribution of investment research; 

18 (4) the costs of such research; 

19 (5) the impacts of different payment mecha20 nisms for investment research into small issuers, in21 cluding whether such research is paid for by— 

22 (A) hard-dollar payments from research 

23 clients; 

24 (B) payments directed from the client’s 

25 commission income (i.e., ‘‘soft dollars’’); or 


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1 (C) payments from the issuer that is the 

2 subject of such research; 

3 (6) any unique challenges faced by minority4 owned, women-owned, and veteran-owned small 

5 issuers in obtaining research coverage; and 

6 (7) the impact on the availability of research 

7 coverage for small issuers due to— 

8 (A) investment adviser concentration and 

9 consolidation, including any potential impacts of 

10 fund-size on demand for investment research of 

11 small issuers; 

12 (B) broker and dealer concentration and 

13 consolidation, including any relationships be14 tween the size of the firm and allocation of re15 sources for investment research into small 

16 issuers; 

17 (C) Securities and Exchange Commission 

18 rules; 

19 (D) registered national securities associa20 tion rules; 

21 (E) State and Federal liability concerns; 

22 (F) the settlement agreements referenced 

23 in Securities and Exchange Commission Litiga24 tion Release No. 18438 (i.e., the ‘‘Global Re25 search Analyst Settlement’’); and 


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1 (G) Directive 2014/65/EU of the European 

2 Parliament and of the Council of 15 May 2014 

3 on markets in financial instruments and 

4 amending Directive 2002/92/EC and Directive 

5 2011/61/EU, as implemented by the European 

6 Union (‘‘EU’’) member states (‘‘MiFID II’’). 

7 (c) REPORT REQUIRED.—Not later than 180 days 

8 after the date of the enactment of this Act, the Securities 

9 and Exchange Commission shall submit to Congress a re10 port that includes— 

11 (1) the results of the study required by sub12 section (a); and 

13 (2) recommendations to increase the demand 

14 for, volume of, and quality of investment research 

15 into small issuers, including emerging growth com16 panies and companies considering initial public of17 ferings. 

Æ 


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